FIN 4223 Exam 1 ACTUAL QUESTIONS
WITH CORRECT ANSWERS
theKdividendKyieldKisKdefinedKasKtheKannualKdividendKexpressedKasKaKpercentageKofK-
KCORRECTKANSWERSinitialKstockKprice
whatKshouldKbeKusedKtoKcompareKtheKoverallKperformanceKofK3KdifferentKinvestmentsK-
KCORRECTKANSWERSEARK(effectiveKannualKreturn)
bestKmethodKofKcomparingKtheKreturnsKonKvariousKsizedKinvestmentsK-
KCORRECTKANSWERSpercentageKreturn
distributionKofKinvestmentsKfundsKamongKvariousKbroadKassetKclassesK-
KCORRECTKANSWERSassetKallocation
researchingKchemicalKcompaniesKinKanKeffortKtoKdetermineKwhichKcompaniesKstockKheKshouldKpur
chase...aKprocessKknowKasK-KCORRECTKANSWERSsecurityKselection
amountKofKcashKthatKmustKbeKpaidKtoKpurchaseKaKsecurityKonKmarginK-
KCORRECTKANSWERSinitialKmargin
minimumKequityKthatKmustKbeKmaintainedKatKallKtimesKinKaKmarginKaccountK-
KCORRECTKANSWERSmaintenanceKmargin
whenKyourKequityKpositionKinKaKsecurityKisKlessKthanKtheKrequiredKamountKyourKfirmKwillKissueKaK-
KCORRECTKANSWERSmarginKcall
heKwantsKtoKpurchaseKsharesKinKGM,Kford,KHondaKallKofKwhichKareKautoKmanufacturers...whichKisKaK
-KCORRECTKANSWERSsecurityKselection
, investK55%KofKherKmoneyKinKlargeKcompanyKstocks,K40%KinKsmall,KandK5%KinKcash...KthisKisKanK-
KCORRECTKANSWERSassetKallocation
determinationKofKwhichKindividualKstocksKtoKpurchaseKwithinKaKparticularKassetKclassK-
KCORRECTKANSWERSsecurityKselection
whoKsetsKtheKabsoluteKminimumKinitialKmarginKrequirementK-
KCORRECTKANSWERSFederalKReserve
whoKsetsKtheKmaintenanceKmarginKrequirementKforKyourKaccountK-
KCORRECTKANSWERSyourKbroker
optKtoKpurchaseKsharesKofKstockKonKmarginKratherKthanKwithKcashKwill...K-
KCORRECTKANSWERSincreaseKyourKmaximumKpotentialKrateKofKreturn
whatsKtheKpurposeKofKaKmarginKcallK-
KCORRECTKANSWERStoKdemandKfundsKtoKincreaseKyourKmarginKposition
ifKtheKpriceKofKtheKsecurityKincreasesK-
KCORRECTKANSWERSanKinvestorKwithKaKlongKpositionKinKaKsecurityKwillKmakeKmoney
augustK8KofKthisKBrettKsoldK500KsharesKforK$24KonKseptK6KheKpurchasedK500KsharesKtoKcoverKhisKposi
tion.KthisKtransactionKisKaK-KCORRECTKANSWERSshortKsale
IfKyouKbenefitKwhenKaKsecurityKdecreasesKinKvalue,KyouKhaveKaK_____KpositionKinKtheKsecurity.K-
KCORRECTKANSWERSshort
fixedKincomeKisKdefinedKasK-
KCORRECTKANSWERSlongKtermKdebtKobligationKthatKpaysKscheduledKfixedKpayments
WITH CORRECT ANSWERS
theKdividendKyieldKisKdefinedKasKtheKannualKdividendKexpressedKasKaKpercentageKofK-
KCORRECTKANSWERSinitialKstockKprice
whatKshouldKbeKusedKtoKcompareKtheKoverallKperformanceKofK3KdifferentKinvestmentsK-
KCORRECTKANSWERSEARK(effectiveKannualKreturn)
bestKmethodKofKcomparingKtheKreturnsKonKvariousKsizedKinvestmentsK-
KCORRECTKANSWERSpercentageKreturn
distributionKofKinvestmentsKfundsKamongKvariousKbroadKassetKclassesK-
KCORRECTKANSWERSassetKallocation
researchingKchemicalKcompaniesKinKanKeffortKtoKdetermineKwhichKcompaniesKstockKheKshouldKpur
chase...aKprocessKknowKasK-KCORRECTKANSWERSsecurityKselection
amountKofKcashKthatKmustKbeKpaidKtoKpurchaseKaKsecurityKonKmarginK-
KCORRECTKANSWERSinitialKmargin
minimumKequityKthatKmustKbeKmaintainedKatKallKtimesKinKaKmarginKaccountK-
KCORRECTKANSWERSmaintenanceKmargin
whenKyourKequityKpositionKinKaKsecurityKisKlessKthanKtheKrequiredKamountKyourKfirmKwillKissueKaK-
KCORRECTKANSWERSmarginKcall
heKwantsKtoKpurchaseKsharesKinKGM,Kford,KHondaKallKofKwhichKareKautoKmanufacturers...whichKisKaK
-KCORRECTKANSWERSsecurityKselection
, investK55%KofKherKmoneyKinKlargeKcompanyKstocks,K40%KinKsmall,KandK5%KinKcash...KthisKisKanK-
KCORRECTKANSWERSassetKallocation
determinationKofKwhichKindividualKstocksKtoKpurchaseKwithinKaKparticularKassetKclassK-
KCORRECTKANSWERSsecurityKselection
whoKsetsKtheKabsoluteKminimumKinitialKmarginKrequirementK-
KCORRECTKANSWERSFederalKReserve
whoKsetsKtheKmaintenanceKmarginKrequirementKforKyourKaccountK-
KCORRECTKANSWERSyourKbroker
optKtoKpurchaseKsharesKofKstockKonKmarginKratherKthanKwithKcashKwill...K-
KCORRECTKANSWERSincreaseKyourKmaximumKpotentialKrateKofKreturn
whatsKtheKpurposeKofKaKmarginKcallK-
KCORRECTKANSWERStoKdemandKfundsKtoKincreaseKyourKmarginKposition
ifKtheKpriceKofKtheKsecurityKincreasesK-
KCORRECTKANSWERSanKinvestorKwithKaKlongKpositionKinKaKsecurityKwillKmakeKmoney
augustK8KofKthisKBrettKsoldK500KsharesKforK$24KonKseptK6KheKpurchasedK500KsharesKtoKcoverKhisKposi
tion.KthisKtransactionKisKaK-KCORRECTKANSWERSshortKsale
IfKyouKbenefitKwhenKaKsecurityKdecreasesKinKvalue,KyouKhaveKaK_____KpositionKinKtheKsecurity.K-
KCORRECTKANSWERSshort
fixedKincomeKisKdefinedKasK-
KCORRECTKANSWERSlongKtermKdebtKobligationKthatKpaysKscheduledKfixedKpayments